How safe is your investment?
Key protections for private investors
- Hargreaves Lansdown Plc is a constituent of the FTSE 100, an index of the biggest listed companies in the UK.
- We look after more than £43.4 billion for our clients.
- We have grown our business organically (not by buying other businesses) by aligning our interests with those of our clients. We focus solely on providing investment services to our clients.
- We place deals only on behalf of our clients, we do not buy and sell investments for our own benefit. This means our business depends solely on the service we provide you and the performance of your investments, not on the success, or otherwise, of any investment decisions we make on our own behalf.
- We do not act as a bank, we have no borrowings and we have no exposure to sub-prime assets.
- Most of the assets of the directors and senior managers are tied up in the business. Directors and staff own well over 37% of the equity and this means that they have a very significant interest in protecting the company and can take a long-term view.
- The business is managed conservatively, with a long serving employee base.
We are regulated by the FCA
Hargreaves Lansdown is regulated by the Financial Conduct Authority (FCA) and is bound by their rules and regulations in the conduct of our investment business. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Stockbrokers Limited are authorised by the FCA to hold client money and client assets. You can telephone the FCA Consumer Help Line on 0800 111 6768 (8am-6pm Monday to Friday and 9am-1pm Saturday), to check our registration or ask other queries. Alternatively, you may write to them at the FCA Consumer Help Line, 25 The North Colonnade, Canary Wharf, London, E14 5HS or you can visit www.fca.org.uk
The FCA requires firms to publish certain information to enable the market to assess a firm's risks, capital and risk management procedures - known as Pillar 3 disclosure.
We take a very conservative approach to accounting
We make regular submissions of our solvency to the FCA, together with annual audited financial statements, annual audited returns of information and a report from the auditors assessing our compliance with the FCA client money rules. See our annual reports and accounts. These demonstrate that we take a very conservative approach to accounting - no borrowings and we hold considerably more cash than the regulations require. The majority of our income is generated from renewal commission. We share this with our clients and this further aligns our interests with theirs. It is a secure source of income as it is spread across a large number of providers and new business takes a long time to translate into profits, so unlike many firms we are not dependent on short term new business to cover our costs.
Client money is held on deposit in Trust
All client money is held on deposit in Trust accounts, so that any creditors of Hargreaves Lansdown would have no legal right to it, we cannot use any of this money to cover Hargreaves Lansdown's obligations, and is subject to controls and procedures over and above those required by the FCA. In addition client money within the Vantage Service will be spread across a number of banks, excluding the HL Vantage Cash ISA which is held specifically with Lloyds Bank.
Our policy for choosing banks is continually reviewed and the primary consideration is always security. We monitor the performance and security of a range of banks to ensure we are able to anticipate and react to changing economic and institutional conditions.
We have continued to maintain a conservative approach on which of these banks to use, preferring to distribute balances across a few carefully selected banks which we believe are of systemic importance to the UK's financial system and wider economy. Our current approach is to use a number of different banks each with separate UK banking licenses. We will keep this policy under review.
The Financial Services Compensation Scheme (FSCS) provides that each individual is entitled to up to the equivalent in sterling of 100% of the first €100,000 in total in compensation for losses across all their deposits with that institution. Our current policy, which diversifies client money between a number of separately licensed institutions, means that our clients would receive this level of protection with each of the banks we use.
Stocks protected in nominee accounts with you as beneficial owner
Stock you hold with us is held by Hargreaves Lansdown Nominees Limited, a non-trading company which is a member of the Hargreaves Lansdown Group of Companies. As a non-trading company it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. We maintain detailed records of all your investments and assets for which you will at all times remain the beneficial owner. As with client money, our custody records are subject to controls and procedures over and above those required by the FCA.
We do not lend any stock held in Vantage.
Financial Services Compensation Scheme
Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £50,000 (increased from £48,000 in January 2010) in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to up to the equivalent in sterling of 100% of the first €100,000 in total in compensation for losses across all their deposits with that institution. Full details of the FSCS detailing the restrictions and financial limits that apply are available on request from the FSCS. You can contact them on 020 7741 4100 or 0800 678 1100 or at www.fscs.org.uk. You can also write to them at FSCS, 10th Floor, Beaufort House, 15 St Botolph Street, London EC3A 7QU.
All Hargreaves Lansdown Group companies are registered in England and Wales and consequently are governed by the Companies Act, which includes a requirement to have the financial accounts audited each year by independent accountants, we currently use the international firm Deloitte, which is one of the big four chartered accountants in the world. They also do our regulatory audit.
ISA and SIPP procedures are independently assessed by HM Revenue & Customs
Hargreaves Lansdown Asset Management Limited is also registered with HM Revenue & Customs to enable us to act as an ISA and SIPP manager. Accordingly, our procedures for operating ISA and SIPP Plans are also independently assessed by HM Revenue and Customs.
Unit trusts and OEICs use a trustee or depositary to protect investors
Unit trusts and OEICs use a trustee or depositary to actually hold the title to the underlying stocks they hold in their funds. This means that if the fund manager gets into financial difficulty your assets are protected from their creditors. The time that the FSCS does not protect you is if one of the underlying stocks within a fund manager's portfolio goes bust.
Please contact us if you would like more information on the security of your investments
We want to ensure that everybody who invests with Hargreaves Lansdown is content about the nature of the investment that they have made and the various protections that are available to them. Accordingly, please feel free to contact us at any time if you would like to discuss this issue in greater detail.
Hargreaves Lansdown Group comprises the following regulated companies: Hargreaves Lansdown Asset Management Ltd, Hargreaves Lansdown Stockbrokers Ltd, Hargreaves Lansdown Advisory Services Ltd and Hargreaves Lansdown Fund Managers Ltd.
Please remember that the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. If you are unsure of the suitability of your investment please seek advice.
Have a question?
Call us on 0117 900 9000